Recapitalizations

Have you ever wanted to grow your business and/or minimize your financial risk but are not ready to sell or retire? If so, a recapitalization may be a great option for you.

A recapitalization is where one effectively sells shares (or issues new shares) to a new owner, but continues to retain some level of ownership in their company. The new owner may end up as a majority or minority owner, depending on their level of investment, but they are typically a financial partner in the business. In most cases, the original owner will continue to run operations on a day-to-day basis.

The benefits of a successful recapitalization can include:

Reducing financial risk in the business by taking some chips of the table today

Providing growth capital by partnering with a well-funded financial buyer

Accelerating growth faster than would be possible independently

Access to industry, management and board level resources and support

Accelerated growth of remaining equity ownership

Recapitalizations are not for everyone. Typical situations of a good recapitalization candidate include:

EBITDA in excess of $1.5 million-2 million annually

Excellent growth prospects

Attractive industry focus

Strong owner/management team that want to be involved in the future of the business

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